Companies.

[2023]JRC099

Royal Court

(Samedi)

20 June 2023

Advocate W. A. F. Redgrave for the first Plaintiff.

Advocate M. C. Seddon for the Defendant.

judgment

the commissioner:

1.        This judgment contains my reasons for making a costs order in favour of the Plaintiff in relation to the costs of the action, apart from the costs of the quantum trial in relation to claims by the Plaintiff to recover a bonus, private medical insurance relocation costs, death in service cover, and directors and officers insurance where I made a costs order in the defendant’s favour.  This was due to the Plaintiff withdrawing these claims.  The principal issue I had to consider was the basis of the costs orders that I was invited to make. 

2.        This application follows on from a series of applications, mainly before me in my previous role as Master of the Royal Court. 

3.        On 13 January 2021, I struck out the Defendant’s Answer and Counterclaim reported at Sheyko v Consolidated Minerals Limited [2021] JRC 006.  That decision was upheld by the Royal Court on appeal in its judgment dated 29 October 2021 reported at [2021] JRC 267.  Leave to appeal the Royal Court’s decision was refused by Bompas JA sitting as a single judge, reported at Consolidated Minerals Limited v Sheyko [2022] JCA 018. 

4.        The effect of the decision of the single judge of the Court of Appeal on an application for leave is that such a decision is final and no further right of appeal exists.

5.        Following my decision to strike out the Defendant’s claim reported [2021] JRC 006, judgment was entered on liability with damages to be assessed.  The Plaintiff then applied for summary judgment, leading to my judgment dated 7 July 2021 reported at [2021] JRC 186, where I gave summary judgment on an admission by the Defendant that, if the Plaintiff was wrongfully dismissed (which was still in dispute at that stage), he was entitled to a gross sum of US$12,410, 958, subject to deductions of any tax and national insurance payable, plus a further sum of US$905,666.67 representing pension contributions.  I also determined what interest was payable.  However although I granted summary judgment, I stayed enforcement of the order giving summary judgment the monies paid into court remained there until determination of the Defendant’s appeal to the Royal Court as this was a complete rehearing of the application to strike out the Defendants’ claim for breaches of procedural rules. 

6.        Following the Royal Court upholding the decision to enter judgment on liability and Bompas JA refusing leave, in my judgment of 6 April 2022, reported at [2022] JRC 082 I granted the Plaintiff’s application that all sums previously paid into Court by the Defendant be paid out to the Plaintiff.  The majority of monies paid into Court were in substitution for injunctions granted in favour of the Plaintiff as noted at paragraph 1 to 3 of the judgment of the Deputy Bailiff dated 29 January 2019, reported at [2019] JRC 008.  I had also ordered certain sums be paid into court as a condition of staying enforcement.  Accordingly, only the Plaintiff’s claims for other losses as summarised at paragraph 1 above remained. 

7.        On 9 November 2022, the Privy Council refused permission to the Defendant to appeal the decision of Bompas JA refusing leave.  This was stated in the order refusing leave to be because the Privy Council had no jurisdiction to hear any appeal. 

8.        The balance of the Plaintiff’s claims were due to be determined before the Royal Court.  However, by agreement recorded in a consent order dated 12 April 2023, the Plaintiff decided to withdraw the remaining elements of his quantum claim and therefore the dates for a pre-trial review and trial were set aside, save to the extent that a hearing was required to resolve any outstanding issue as to costs. 

9.        The application before me was to determine those costs issues. 

10.      In advance of the hearing, the Plaintiff sought its costs on an indemnity basis, pursuant to a contractual right of indemnity contained in Clause 3.4 of his Service Agreement with the Defendant.

11.      The question of how far the Royal Court should give effect to a contractual right of indemnity was considered by the Royal Court in Tygres Investments Limited v Jersey Home Loans [2016] JCA 173.  However, this was an application without contested argument and the decision was qualified to that extent.  However, in Waterfront (LC) Limited v Cine-UK Limited [2022] JRC 233, as Master, I reviewed the decision in Tygres following a contested hearing and confirmed that it was represented Jersey law.

12.      In relation to the Plaintiff’s present action, and his conduct of the proceedings, I do not consider there is any conduct or good reason which justifies disentitling the Plaintiff his costs on the agreed contractual basis.  I would add, given my findings as confirmed by the Royal Court and the Court of Appeal leading to the entering of judgment on liability, the conduct of the Defendant supports granting the Plaintiff costs on the agreed basis.  

13.      I wish to clarify in relation to allowing the Plaintiff to recover his costs on the indemnity basis that to the extent that I previously made costs orders as Master on a standard basis, as far as I can recall, this took place without consideration of the contractual indemnity point and so such orders should not prevent the Plaintiff from relying on that indemnity at this stage.  If there are any reasons I have issued expressing a different conclusion and expressly depriving the Plaintiff of the benefit of his contractual indemnity, the Defendant can still rely on any such decision if my recollection is incorrect.  

14.      It is right to add that although Advocate Seddon appeared today, he appeared without instructions.  The Defendant has not therefore sought to challenge the approach that should be taken where a contractual right of indemnity costs exists. 

15.      The one qualification to the above order is, as Advocate Redgrave fairly accepted, that the Defendant should recover its costs of the withdrawn proceedings.  The point for decision was whether such an order should be on the standard or the indemnity basis. 

16.      I explored this question in Alpen Partners Limited v Samirl Al-Amiri, where I stated at the following at paragraphs 10 to 14:

“10.    In relation to what happens on a withdrawal, two particular cases were drawn to my attention. The first is Dick v Dick (1990) JLR Notes - 2c and the unreported judgment dated 6th April 1990. The unreported judgment stated the following: -

"Mr Schofield has explained to us the circumstances which led the appellant to take this decision. We appreciate those circumstances but it appears to us that if for reasons of his own, whether good or bad, a party who has instituted proceedings subsequently decides to drop them before they came into court, it is fair that he should pay for that conduct the price of compensating the other party by way of indemnity costs."

11. However, in JFSC y AP Black (Jersey) Ltd [2007] JLR 1 where costs were sought against a public body which subsequently withdrew proceedings, Commissioner Page stated at paragraph 45 the following: -

"45 Rule 6/31(1) of the Royal Court Rules 2004 provides: "Except with the consent of the other parties to the action, a party may not discontinue an action ... without the leave of the Court, and any such leave may be given on such terms as to costs, the bringing of a subsequent action or otherwise as the justice of the case may require." That rule plainly confers a wide discretion on the court in relation to matters of costs, akin to and consistent with that conferred by art. 2(1) of 2007 JLR 20 the CPL. This means that while it is common practice for costs to be awarded against the discontinuing party, on the basis that that reflects the justice of the case, each case has to be considered in the light of its own particular circumstances, with due reference to the principles summarized by this court in Watkins v. Egglishaw (11) and, where the proceedings have been instigated by a body engaged in a public- interest function, the considerations discussed earlier in Section D of this judgment."

12. While this decision related to a withdrawal of proceedings by a public body, it is a helpful reminder of the breadth of the discretion vested in a court when dealing with questions of costs. In particular the "common practice" should not become a rule so that invariably a party who withdraws proceedings always has indemnity costs ordered against them. That is because to turn practice into too rigid a rule means that the court is not exercising a discretion on a case-by- case basis.

13. At this point, it is right to look at to the approach taken in England to which Advocate Kelleher helpfully referred me. He stated the following at paragraphs 50 and 51 of his skeleton: -

"50. By way of contrast, the position in England and Wales is different in its emphasis, albeit the factors that may be taken into account by the Court in deciding on costs arising from discontinuance are instructive, Under CPR 38.6, the default rule is that a party who withdraws its pleadings (or part of its) is considered to be liable for the relevant wasted costs:

"(1) Unless the court orders otherwise, a claimant who discontinues is liable for the costs which a defendant against whom the claimant discontinues incurred on or before the date on which notice of discontinuance was served on the defendant.

(2) If proceedings are only partly discontinued –

(a) the claimant is liable under paragraph (1) for costs relating only to the part of the proceedings which he is discontinuing ... " 51. In Brookes y HSBC Bank Plc [2011] EWCA Civ 35433, Moore-Bick LJ set out the following principles at [6] (approved in Nelson's Yard Management Co v Eziefula and Ashany v Eco-Bat Technologies Ltd [2018] EWCA Civ 1066 at [16]34):

51.1. "when a claimant discontinues the proceedings, there is a presumption by reason of CPR r.38.6 that the defendant should recover his costs; the burden is on the claimant to show a good reason for departing from that position."

51.2. "the fact that the claimant would or might well have succeeded at trial is not itself a sufficient reason for doing so."

51.3. "however, if it is plain that the claim would have failed, that is an additional factor in favour of applying the presumption."

51.4. "The mere fact that the claimant's decision to discontinue may have been motivated by practical, pragmatic or financial reasons as opposed to a lack of confidence in the merits of the case will not suffice to displace the presumption."

51.5. "If the claimant is to succeed in displacing the presumption he will usually need to show a change of circumstances to which he has not himself contributed."

51.6. "however, no change in circumstances is likely to suffice unless it has been brought about by some form of unreasonable conduct on the part of the defendant which in all the circumstances provides a good reason for departing from the rule.""

14. In my judgment, this approach is not so far from the common practice referred to by Commissioner Page but at a level of detail which I regard as helpful. While the English presumption does not focus on whether costs should be on the standard or indemnity basis, the questions posed in my judgement are relevant to a determination of the basis of costs to be awarded and whether the "common practice" in this jurisdiction of awarding indemnity costs following a withdrawal of a claim should be followed or departed from.”

17.      In relation to this decision Advocate Redgrave emphasised that the starting point was not indemnity costs but an exercise of discretion.  I agree.  Unlike in Alpen, this is not the Plaintiff conceding a point that he should have conceded earlier.  The main element of the remaining part of the claim concerned a claim for a bonus.  This aspect of the claim was very much arguable.  It is also an understandable position that, having fought off any rights of appeal and having summary judgment and having been paid the main and very substantial part of his claim, the Plaintiff then chose not to pursue the balance of the claim.  The circumstances he faced were then different because far less was as stake than had been the case while there was a challenge to the judgment on liability.  While therefore the withdrawal justifies an order for costs in the Defendant’s favour, I have concluded as a matter of discretion that this case is not one in the arena of making an indemnity costs order.  The Defendant will therefore recover the costs of the withdrawn claims on the standard basis.

Authorities

Sheyko v Consolidated Minerals Limited [2021] JRC 006. 

Sheyko v Consolidated Minerals Limited [2021] JRC 267.  

Consolidated Minerals Limited v Sheyko [2022] JCA 018. 

Sheyko v Consolidated Minerals Limited [2021] JRC 186.

Sheyko v Consolidated Minerals Limited [2022] JRC 082

Sheyko v Consolidated Minerals and Anor [2019] JRC 008.  

Tygres Investments Limited v Jersey Home Loans [2016] JCA 173.

Waterfront Limited (LC) Limited v Cine-UK Limited [2022] JRC 233.